§ 31.3.2.3.1 Exhaustion of Administrative Remedies.

• Jurisdiction: Arizona

§ 31.3.2.3.1 Exhaustion of Administrative Remedies. Courts may not review administrative agency actions unless all required administrative remedies have been exhausted. See, e.g., Foremost Life Ins. Co. v. Trimble, 119 Ariz. 222, 224, 580 P.2d 360, 362 (App. 1978); A.R.S. §§ 12-901, 12-902. The exhaustion doctrine is concerned with the availability of judicial review in light of alternative available administrative forums and with orderly procedure in resolving disputes initially entrusted to administrative agencies. The doctrine is both statutory and judicially-created.

The exhaustion principle requires that the issues raised on judicial review have been raised in the agency proceedings. Kessen v. Indus. Comm’n, 195 Ariz. 488, 493, ¶¶ 18-19, 990 P.2d 689, 694 (App. 1999). Similarly, judicial review is precluded for an issue not raised in a request for administrative review. Brown v. Indus. Comm’n, 168 Ariz. 287, 288, 812 P.2d 1105, 1106 (App. 1991).

“[E]xhaustion of remedies is generally a prerequisite to judicial relief which is based on the needs of judicial administration and not on consideration of the courts’ subject-matter jurisdiction,” therefore, the defense of failure to exhaust administrative remedies by seeking rehearing in the agency is waived if not pled in the reviewing court. Medina v. Ariz. Dep’t of Transp., 185 Ariz. 414, 418, 916 P.2d 1130, 1134 (App. 1995).

Several policies underlie the exhaustion doctrine. First, permitting immediate judicial review frequently disrupts ongoing administrative proceedings before the agency has had a chance to develop and review all of the relevant factors implicated by its decision. Town of Paradise Valley v. Gulf Leisure Corp., 27 Ariz. App. 600, 610, 557 P.2d 532, 542 (App. 1976). Second, courts are reluctant to invade areas of agency expertise. Mountain View Pioneer Hosp. v. Employment Sec. Comm’n, 107 Ariz. 81, 85, 482 P.2d 448, 452 (1971). Third is the interest in economizing on judicial resources. Univar Corp. v. City of Phoenix, 122 Ariz. 220, 223, 594 P.2d 86, 90 (1979).

The exhaustion doctrine is subject to several possible exceptions. Some exceptions are well-established and others are tenuous and debatable. First, application of the doctrine may be inappropriate when the agency’s subject matter jurisdiction is challenged. Campbell v. Chatwin, 102 Ariz. 251, 257, 428 P.2d 108, 114 (1967). Exhaustion is required only when a statute grants an administrative agency original jurisdiction over...